A Macroeconomic Model with Financial Panics
This paper incorporates banks and banking panics within a conventional macroeconomic framework to analyze the dynamics of a financial crisis of the kind recently experienced. We are particularly interested in characterizing the sudden and discrete nature of the banking panics as well as the circumstances that makes an economy vulnerable to such panics in some instances but not in others. Having a conventional macroeconomic model allows us to study the channels by which the crisis affects real activity and the effects of policies in containing crises.
The views expressed in this paper are solely those of the authors and do not necessarily reflect those of the Board of Governors of the Federal Reserve, the Federal Reserve System, or National Bureau of Economic Research. We thank for their helpful comments Frederic Boissay, Pat Kehoe, John Moore as well as participants in various seminars and conferences. Financial support from the National Science Foundation and the Macro Financial Modeling group at the University of Chicago is gratefully acknowledged.
Mark Gertler & Nobuhiro Kiyotaki & Andrea Prestipino, 2020. "A Macroeconomic Model with Financial Panics," The Review of Economic Studies, vol 87(1), pages 240-288. citation courtesy of